It’s always interesting when analyst firm Gartner gets out its crystal ball and tries to determine what the future will look like for IT organizations. This year’s outlook, unveiled this week at the Gartner Symposium/ITxpo, had few real surprises – focusing as it did on coming shifts linked to mobile technologies and Big Data.
Some of the predictions built on earlier ones. For instance, in late 2011 Gartner said that through 2015, more than 85 percent of Fortune 500 organizations would fail to effectively exploit so-called Big Data for competitive advantage. This week Gartner said Big Data demand will reach 4.4 million jobs globally by 2015 — but just a third of Big Data jobs will be filled. And it forecast software spending resulting from the proliferation of smart operational technology will grow by 25 percent a year through 2014. Such devices will obviously be one of the major sources of all of that data.
Two of the more surprising insights relate to outsourcing and globalization.
Legislation and Automation
By 2014, Gartner expects to see legislation designed to protect local jobs in the European Union. Already the EU appears headed in that direction, with its focus on Single Market measures designed to ease business between European countries. According to eurobserver.com, the EU Commission intends to introduce proposals to establish a European Employment Guarantee and a formal network of European Public Employment Services.
According to Gartner, this wave of protectionism will result in a 20 percent net reduction of offshoring through 2016. However, Gartner said, “This does not mean that organizations would abandon the use of global delivery models, but it would result in the rebalancing of where labor is located with such models.”
As Gartner noted, “Opportunities would be created for firms to invest further in lower-cost parts of Europe, or in areas within their domestic location, where costs may be lower.” Again, this already appears to be happening, with a ZDNet piece pointing out that Romania is providing competition for Poland, the biggest outsourcing destination in Eastern Europe, with its lower wages. Within Romania, companies are looking beyond the capital of Bucharest to lower-cost cities and some are looking instead at alternatives like Ukraine.
Gartner also believes that IT hiring in major Western markets will come predominantly from fast-growing, Asian-headquartered companies through 2015. Western companies still suffering from a tough economy will take a conservative approach to hiring, while Asian companies will be making big investments to increase their geographic reach.
Automation the New Outsourcing?
And, Gartner said, “Exacerbating the disparity between the hiring practices of Western and Asian organizations will be the increased use of industrialized IT solutions, which will further reduce the IT staffing needs of Western firms.”
Could automation become the “new outsourcing?” I’ve been writing for quite some time about the potential for automation to become a more popular cost-savings measure than outsourcing. In late 2011, I cited a Nucleus Research report that found: “Rather than invest in hiring, retaining, and potentially paying the costs of laying off staff, companies are choosing to invest in technology to improve customer service and support, analyze data for better decision making, and generate more productivity from the employees they still have.”
I don’t see this trend going away. But do I think automation will ever replace outsourcing? No, because outsourcing has the ability to help companies transform their business processes in a way that goes far beyond the process improvements automation can provide.
Regardless of whether Gartner’s predictions are completely on target, I think it’s going to be an interesting couple of years ahead.